This Week in Compliance: Danske Bank Chairman to Step Down Following Money-Laundering Scandal

by GAN Integrity on November 9th, 2018

This Week in Compliance: Danske Bank Chairman to Step Down Following Money-Laundering Scandal

Business

Danske Bank chairman to step down following money-laundering scandal: Danske Bank’s Ole Andersen has been forced out of his role as chairman this week. The bank’s biggest shareholder, A.P. Moller Holding A/S, which owns a roughly twenty percent stake in the bank, made it clear this week that the bank’s board had been “too slow” to respond to the crisis. The announcement followed Andersen’s failed attempts to get a new CEO approved after the bank’s current CEO resigned last month in relation to the same scandal. It emerged this year that up to USD 230 billion in suspicious funds flowed through the bank’s Estonian branch. The bank is now the target of criminal investigations in multiple jurisdictions, including the U.S. and Denmark.

UK’s Serious Fraud Office drops case against mining chief: The SFO announced this week that it is abandoning its case against Benedikt Sobotka, head of the Eurasian Resources Group (ERG) mining company. The case relates to the long running investigation into ERG subsidiary Eurasian Natural Resources Corporation (ENRC) over allegations of fraud, bribery, and corruption in relation to the acquisition of substantial mineral assets. Sobotka was charged by the SFO for his failure to appear for questioning in the ENRC probe. ENRC was involved in a separate dispute with the SFO earlier this year over legal professional privilege pertaining to internally produced documents pertaining to the corruption charges.

Former Goldman Sachs CEO Lloyd Blankfein was unidentified executive in 1MDB meeting: Bloomberg reported this week that former CEO Lloyd Blankfein is the unidentified high-ranking Goldman Sachs executive referred to in U.S. court documents relating to the indictment of two former Goldman Sachs bankers last week for their involvement in the 1MDB investment fund scandal. The 2009 meeting in question was set up by Malaysian businessman Jho Low and Goldman partner Tim Leissner, both of whom were charged last week. The meeting, which involved former Malaysian Prime Minister Najib Razak, laid the groundwork for the profitable relationship between the scandal-hit investment fund and Goldman Sachs. The bank ultimately made over USD 600 million in fees from the deal, which have now become a sore point for the new Malaysian government which is hoping to recoup some of the fees. The bank said in its quarterly filings last month that it may face significant fines from regulators in relation to the allegations.

Government

OECD warns about “golden passport” schemes due diligence risks: The Organization for Economic Cooperation and Development (OECD) published a list this week with so-called “golden passport” schemes in 21 countries that are liable to abuse and can potentially help an individual misrepresent his or her jurisdiction of tax residence. Golden passport schemes typically offer residency or citizenship in return for investment. The 21 programs identified run the risk of facilitating money-laundering and tax avoidance since they offer low rates of taxation of foreign income and don’t require individuals to spend much time in the country. Among European nations, Malta, Monaco, and Cyprus were flagged by the organization. The OECD has announced it will provide practical guidance for financial institutions to help them spot and prevent tax avoidance through these schemes.

Former First Lady of the Philippines convicted on corruption charges: Imelda Marcos, former First Lady of the Philippines, was convicted this week on corruption charges that resulted from a court case that has been ongoing for almost two decades.The charges relate to private foundations Marcos set up in Switzerland while in office in the late eighties. President Ferdinand Marcos and his wife became infamous for accumulating billions of dollars funneled into Swiss accounts over the 21 years that they were in power. Imelda Marcos’ arrest was ordered immediately after the verdict was delivered, but she will be able to remain free on bail on appeal. The conviction also means that she will be barred from public office, thereby forcing her to step down from her current position as a member of the House of Representatives.

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